OTTAWA — Canada’s parliamentary budget office says Ottawa’s books will remain in the red in the coming fiscal year if battered oil prices continue to hover close to their current lows.

But the budget watchdog maintains the Harper government still has plenty of options to fulfil its long-held pledge to balance the budget in 2015-16.

The office released a new analysis Tuesday that predicts low oil prices will put the government on track to exhaust the $3-billion federal contingency reserve and run a deficit of $400 million in 2015-16. The calculations are based on a scenario where oil prices average US$48 per barrel for all of 2015.

The office also crunched numbers based on an average oil price of US$51 per barrel for 2015. In that scenario, the federal government would use up much of the contingency reserve and deliver a surplus of $700 million.

The PBO report comes as questions dog the federal government about whether it can still follow through on its vow to guide Canada’s books back into the black — and if so, how it will pull it off.

The government recently took the rare step of delaying the release of its budget until at least April, so it could evaluate the impact of oil prices that have been cut by more than half since last summer.

Finance Minister Joe Oliver has insisted the government will produce a balanced budget for 2015-16, though he has acknowledged it may have to dip into the $3 billion reserve, which has been set aside for unforeseen circumstances.

Any unused money left in the reserve would be earmarked for debt reduction.

Jean-Denis Frechette, the parliamentary budget officer, said Tuesday that even with the impact of low oil prices, it’s still feasible for the government to eliminate the deficit by 2015-16.

Frechette said the government has several options if it hopes to generate more revenue or trim its spending in the upcoming budget.

“It’s not impossible to have a surplus for the 15-16 period,” said Frechette, who noted even a small government deficit wouldn’t cause economic problems.

“It’s a decision for the government to take.”

An official with the budget office gave examples how the government could achieve a balanced budget.

He said Ottawa holds shares in General Motors of Canada worth up to $5 billion, which could be sold off to generate more cash.

The official also said Ottawa could temporarily delay capital projects or could generate some accounting revenue by tweaking the government’s long-term liabilities.